that when the price goes below 89 1/4, you automatically lose. Brokerage clients don't demand more margin, and they don't have to tell the broker to sell for as much as you can.
But when the Cosmopolitan introduced this margin bonus, it was a blow under the belt. This meant that when I bought at ninety, the receipt did not say, as before, "Purchased ten steel at 90 1/8," but "Purchased ten steel at 91 1/8." Like this! After the purchase, the rate could rise by a point and a quarter, and I would still be in the red at the close of trade. And by requiring a margin of three points from the start, they reduced my ability to trade by two-thirds. Still, it was the only brokerage house that would let me do my business, so I had to either accept their terms or give up.
Of course, I have known ups and downs, but overall I have been a winner. However, the Cosmopolitan people weren't satisfied with the monstrous handicap they gave me, which would have been enough to break anyone. They also tried to swindle me. But they didn't get me. My intuition saved me.
As I said, the Cosmopolitan was my last resort. It was the richest brokerage house in New England, and they, as a rule, did not limit the volume of transactions. I think that among their clients I was the most serious player. I came to them as a service. They had a well-appointed office, with the largest and most complete quote board I had ever seen up to that time. It occupied the entire wall of a large room, and there you could find quotes for anything. I mean stocks listed on the New York and Boston Stock Exchanges: cotton, grain, meat, metals - in a word, everything that is bought and sold in New York, Chicago, Boston and Liverpool.
Everyone knows how these gambling houses worked. You gave money to the clerk and said what you would like to buy or sell. He would look at the ticker tape or the quote board and set the price—the latest, of course. He also recorded the time, so that everything together looked almost like a real brokerage document - so many such shares were bought or sold for you, at such and such a price, day, time, and how much money was received from you. When you wanted to close the trade, you approached the clerk - the same one or another, in different offices in different ways, and told him. He wrote down the last price, and if your shares were not active at that time, he waited for the next quote to appear on the ticker tape. He wrote down this price and time on your receipt, put a stamp and returned it to you, and you went to the cashier and got what was supposed to be there. Well, of course, when the market was against you and the price fell below the limit set by your margin, the trade was automatically closed and the receipt turned into just a piece of paper.
In small offices, where those who were able to pay for only five shares were allowed to trade, receipts were narrow strips of paper of different colors - for buying and for selling. Sometimes, as in the case of, for example, a seething bull market, such offices turned out to be a strong loser, because all clients played for a raise and, naturally, won. Then the brokerage houses started charging commissions for both buying and selling, and if you bought a stock for 20, the receipt was 20 1/4. So you were only entitled to 3/4 points for your money.
But Cosmopolitan was the best brokerage house in New England. She had thousands of repeat clients and I think I was the only one they feared. Not a killer bonus, not a three-point margin set for me. did not reduce the scale of my operations. I bought and sold as much as they could handle. Sometimes I had blocks of five thousand shares in my hands.
Well, at the time that I want to tell you what happened, I put three and a half thousand shares of sugar stock short. I had seven large pink receipts, each for five hundred shares. Cosmopolitan used fairly large receipts so that they could charge extra margin from scratch. In small brokerage houses, of course, clients were never offered to increase their margin. The thinner it was, the better it was for them, because they made a profit when the price jumped out of the margin and you got out of the game. If you wanted to expand your margin at such a small shop, they would issue you a new receipt so that you could be charged a commission for the purchase again, and besides, if the price of a pip fell, you only got 3/4 points, because they added and sales commissions as if you had just started trading. On the day I remember, I deposited more than ten thousand dollars as margin.
I was only twenty the first time I raised ten thousand dollars in cash. You should have just listened to my mother. You would think that the only person with even more money than me is old Rockefeller, and she constantly urged me to stop and do some reliable business. I just lost my temper, trying to explain to her that I do not gamble, but earn money on the ability to count. But she understood only one thing: ten thousand is a huge amount of money, and for me this money meant that I could increase the volume of trade.
I opened the sale of my three and a half thousand sugar shares but 105 1/4. There was another player in the book, Henry Williams, who was also short with 2,500 shares. I usually sat next to the telegraph machine and called out quotes for the boy, who wrote them out on the blackboard. Prices moved exactly as I expected. The course immediately dropped a few points and here it stopped, as if taking a breath before diving even deeper. The market as a whole looked very calm and inviting. And then I suddenly felt that I did not like fluctuations in the prices of my sugar stocks. I fell into anxiety. It seemed to me that I should immediately leave the market. My stock was trading at 103 at that point, the low of the day, but I didn't feel confident about winning, but rather confused. I just knew that somewhere something was going wrong, although I did not understand exactly what it was. But if something was coming and I did not know what and from where, I could not protect myself. So, it was best to immediately leave the market.
You understand, I do nothing blindly. I don't like that. And he never allowed himself to. Even as a child, I had to know why I had to do this or that. But this time there was no definite reason other than unbearable anxiety. I called one of the regulars I knew, Dave Wyman, and asked him:
— Dave, take my place. I need your help. When you call out the next sugar quote, slow down a bit, okay?
He agreed, and I gave him a chair next to the telegraph office so that he could name the prices for the boy. I took my seven sugar stock receipts out of my pocket and went to the counter where the clerk marked the receipts for those who were exiting the trade. But I didn't really understand why I had to leave the market, so I just stood up, leaning on the counter and holding the receipts so that the clerk couldn't see them. Then the telegraph crackled, and Tom Burnham, the clerk, craned his head and began to listen. I felt that some kind of vile trap was being prepared, and decided not to wait any longer. Just at that moment, Dave Wyman's voice was heard from the telegraph machine: "Sa ..." - and then I just collapsed on the counter, threw my receipts in front of the clerk and yelled:
- Close the sugar!
Everything happened so fast that Dave didn't even have time to announce the price. Now, of course, the office was obliged to close my shares at the last quote. Dave, as it turned out, shouted out one hundred and three dollars again.
According to my calculations, just at that moment, sugar should have broken through the border of one hundred and three points. But the mechanism worked somehow wrong. I had the feeling that there was a trap right next to me. The telegraph machine began to chirp like crazy, and I noticed that Tom Burnham, the clerk, hadn't marked the price on my receipts and was listening to the new quotes as if he were waiting for something definite. So I yelled at him:
"Hey, Tom, what the hell are you waiting for?" Put a price on these receipts - one hundred and three! And live!
Everyone in the room turned to my cries and started find out what happened, because, you see, Cosmopolitan never cheated, there were no rumors about it, but there is always a danger, like in a bank, that the public will start taking their money from brokers. If one of the clients suspected something was wrong, the rest will start to imitate him. So Tom looked at me sullenly, but got down to business, put on the receipts: "Closed at 103" - and laid out all seven